Green Growth

“Green is not a colour, green is a state of mind” – let me start my conclusions with this quote from Gro Harlem Brundlandt - the mother of the idea that economic development and environment need to go hand in hand. The Brundlandt Report “Our Common Future” released in 1987, inspired the Rio Earth Summit in 1992, which gave birth to the paradigm of “Sustainable Development.” In 2010 the success of COP16 in Cancun helped to achieve concrete progress towards a framework to fight climate changes and re-injected hope and confidence in the multilateral system.

So what is new about green growth? We have known that green and growth must go together for at least 25 years. Let me give you a simple answer to that question: Green Growth is not a “paradigm”; Green Growth is about making it real, about implementation, about concrete recommendations for policy makers and stakeholders. Our Green Growth Strategy aims to present an achievable and actionable policy framework.

This is why we are so grateful you came to Paris for these two workshop days to test and challenge our model, indicators and story in this first draft synthesis report. I understand that there are five main messages coming out of the workshop:

An ambitious, across-the-board policy strategyFirst, we are encouraged to be even more ambitious in turning Green Growth into a strategy for long term progress and we will strengthen our recommendations for a concrete policy framework.

Our goal is to build a bridge between different policy communities and sometimes competing perspectives. Building a bridge between policy makers in finance, economy, trade and environment is one of the cornerstones of our Green Strategy and it is really the competitive advantage of the OECD. We work across the board on all these macro and structural issues, which are crucial for a green policy-mix.

We heard your message this morning to be more ambitious also in the focus on labour markets and jobs. We need a strong and positive message because green growth is about employment. In order to reap the full potential of “green jobs”, we will come up with concrete recommendations to scale up training and skills development in this segment of the labour market.

Revisiting our economic model furtherSecond: economists and policy makers in the economics community will have to revisit standard models of growth, as well as measures of progress like GDP. The orderly and rather linear world of economic policy needs to start paying much greater attention to nature’s non-linearity. We must do more to incorporate systemic environmental risk into our thinking about growth.

We will therefore continue with the development of Green Growth indicators. This will enable us to track countries’ progress in achieving higher living standards and addressing environmental risks. It will also be a basis upon which we can compare the effectiveness of policies in achieving these outcomes.

From this, we will be able to advise countries on a greener growth path. This will be a major contribution to international understanding on policies for promoting environmental quality and long term growth; something which has never before been the subject of systematic international evaluation and analysis.

Economic instruments and innovation build the bridge between green and growthThird: in order to build a Green Growth toolkit, we have to draw on different policy areas in a coherent way. Take innovation, for instance; our innovation strategy is crucial to turn green into a source of growth. With polices to foster innovation as a main driver, policy makers can be more ambitious in their green policy ideas.

The use of economic instruments, such as putting a price on carbon and taxation is crucial in aligning growth with green. Higher environmental taxes combined with lower taxes on labour can be a successful policy strategy.

As some of you pointed out, good ideas from the past can also help. It is still a good idea to use prices to reflect scarcity value and to make polluters pay for the damage they create. It is still a good idea to promote competition in network industries and to remove trade barriers. Fossil fuel subsidies, however, are and will remain a very bad idea.

“Going green” goes only with “going growth”Fourth: environmental policy makers have tended to avoid market based policy in favour of direction from the centre. But today we know that “end of pipe” and “regulation” policies have not been enough. And we have to be honest about the fact that this kind of approach comes at a high cost; in terms of growth potential, in terms of jobs and prospects for increased living standards over the long term.

Environmental policy has to reflect a better understanding of what makes for robust and dynamic economies. Frankly, with some of the advanced economies experiencing weak growth and high unemployment and emerging economies with rapid population growth, inflationary pressures and the fight against poverty, “green” will go nowhere if it is not accompanied by growth.

Emerging and developing economies could benefit more from a greener growth modelFifth, Green Growth is not about a cost-driving luxury for the most advanced economies. We will continue to strengthen our work with emerging economies and developing countries as the fast catch-up process offers opportunities to embark on a greener growth path at an early stage of development.

We should not repeat the environmental mistakes we observed in the industrialisation process of advanced economies. With energy efficiency, technology transfer, green investment and innovation we have a lot to offer to fast developing countries. Green growth is not about green protectionism but about a win-win-situation where all economies involved can gain.

Where do we move from here?Beyond the delivery of this strategy to Ministers in May, we will be turning our attention to measuring and evaluating Green Growth policy performance. This will mean including environmental issues into our economic country reviews and in our Going for Growth flagship publication.

We plan to take the general approach applied in the Green Growth synthesis report and adapt it for specific economic issues and sectors. Work is already being done on energy, and on food and agriculture, which were discussed yesterday.

Other projects in the pipeline include Green Growth perspectives on transport and urban development, and a standalone report on green innovation. We will reach out with concrete projects to emerging economies and support their efforts in developing their Green Growth policy strategies.

Finally, our work on Green Growth will form a major part of our contribution to Rio+20 along with our forthcoming Environmental Outlook to 2050. This, we hope, will be a positive contribution towards practical change in the way we approach growth.

An action-oriented policy framework for Green GrowthLet me conclude by thanking you all for your contributions to the workshop over the past two days. Your advice will be invaluable for the work we have ahead, both before bringing the Green Growth Strategy to Ministers in May and afterwards. We will need you all to make Green growth a reality!

We will work towards an actionable policy framework. Policy change is about implementation. We will carry out substantive analysis, and use tools like best practices and peer reviews to make it happen. Cross-country comparisons of effective policies, international benchmarking, examples of leading countries and performance indicators will be crucial ingredients to help governments overcome political economy concerns. We will need to offer a “Toolkit” with concrete policy recommendations and actions.

Over the past 50 years, the OECD has produced instruments that have transformed the rules of the game and our countries performance in the policy areas of competition, open markets, anti-corruption, investment, education, budgets etc. Green Growth will become another powerful tool – one of the most important tools - for transformational change. Green Growth is not just a colour of growth, it is not just about a state of mind, Green Growth is a very concrete way towards better policies for better lives!